Paper 360
The dramatic YouTube video has more than two million views: plumes of black smoke suddenly billow from the Pixelle pulp mill in Jay, ME, caught on dashcam from the line of trucks delivering logs. Pulping liquor and wood chips rain onto the hood and windshield as the drivers react with dismay (and some rough language).
The incident was caused by a mechanical failure in the pulp digester in April, 2020. After a temporary shutdown, the mill restarted its paper machines using purchased pulp; in 2023, Pixelle permanently ceased production. Often, a shutdown leads to unused assets, empty lots, and a community that struggles to fill the hole left by the presence of a working mill—but that is not the case in Jay.
This 1,000-acre property in Jay, ME, formerly home to a Pixelle linerboard mill, is being redeveloped and revitalized.
The mill was built by International Paper in the mid 1960s and ran continuously (as the Androscoggin Mill) for many years. It was upgraded from one machine to four machines in the 1970s; it was picked up by Verso in 2006, and eventually Pixelle Specialty Solutions acquired the mill (along with Verso’s mill in Stevens Point, WI). That deal finalized in February 2020.
When Pixelle placed the mill real estate and equipment up for sale in March, 2023, the 1,000-acre property attracted the attention of New Mill Capital, a national asset disposition firm with experience buying and selling equipment and real estate assets in a variety of manufacturing sectors. With other investors, New Mill Capital formed JGT2 Redevelopment LLC.
The site’s specialized assets—including well-maintained buildings and equipment, level grading, proximity to vast wood resources, and a skilled local workforce—soon attracted Godfrey Forest Products of Bangor, ME. Godfrey’s plan: a 550,000-square-foot facility to produce oriented strand board (OSB), a construction sheathing product manufactured from the same kinds of wood often used in pulping operations. Once completed, the plant is expected to employ about 150.
We spoke with Daniel Nigrosh of Can-Am Machinery Inc., a pulp and paper industry-experienced reseller operating out of Fitchburg, MA. Can-Am was a marketing and equipment valuation advisor to the sellers as they sought a deal that would give new vitality to the site.
P360°: The 2020 incident had a profound impact on the mill and the surrounding community. Tell us a little more.
NIGROSH: In April of 2020, reports are that there was a serious mechanical failure in the digester. It happened right around the time crews were at lunch; there were no contractors in the mill because of COVID. From what I was told, they didn’t need to put a single Band-Aid on anyone there. The mill permanently halted pulp production, but within two weeks or so, they had two paper machines back up and running on purchased pulp. They ran like that for three years before shutting down.
We had sold the previously idled PM2 for them in 2022 (see sidebar.) The mill eventually idled PM3, which had been making liner board. They restarted with purchased pulp for PM4, which made release liner, about 400 tons a day; and PM5, which was making a more typical packaging paper, a couple of hundred tons a day. So the mill got back up to about 600 tons a day, making good product.
Given that capacity, the supply chain changes must have been considerable. How did the mill manage the switch to purchased pulp?
Yes, it became a real logistical hurdle. They went from having very little purchased pulp to needing to put a bale every 23 seconds in a pulper, 24-7, and slush up enough pulp to keep those large paper machines running. They also needed to unload it, store it, feed the pulper, and then do everything else they were doing in the paper end, while trying to compete in the market. Fortunately, Maine has a great wood basket, and the mill had an incredible work force that accomplished all this at the height of COVID and its economic fallout.
And both of those factors play a role in the revitalization project with Godfrey Forest Products, right?
Yes! It’s an ideal site for them. In 2023, Pixelle approached us to help find a buyer for the Jay mill. My son David Nigrosh and I worked with their corporate development VP to interview buyer groups. Mr. Godfrey expressed interest in a portion of the mill property for his plant, so New Mill purchased the entire property and agreed to sell part of it to Godfrey. By 2026 or so, that wood supply is going to find its way back to the site to feed an OSB plant that will consume a similar amount of wood.
The new plant is going to be built where the woodyard used to be. The area already has all the infrastructure to bring in wood and a big electrical infrastructure to supply this new plant. They’ve got the land and the workers. John Godfrey, the gentleman who is building the plant, has built several other OSB plants. Pixelle didn’t want to sell in pieces, so we all worked very hard to put together a deal with the new buyers.
OSB uses flakes the size of a credit card. You can use different species and smaller diameter wood than is used in a sawmill, just like a pulp mill. The site redevelopment project is not just the OSB plant; it’s the big paper mill building, too. After the paper machines are cleared out of the mill buildings, there will be about one million square feet of manufacturing and warehouse space that the new owners are making available to a broad spectrum of users, including co-locators—companies that can use the OSB to make trusses, engineered wood products, or other down-stream products that use OSB. The building is in good shape, and there will be other tenants, too.
We’re hoping that the OSB plant will be an anchor in the community, getting those trees chopped down again and trucked to the mill.
It’s really a sustainability story—reusing and repurposing. What do you think makes the difference between whether or not a site can be reassessed and rejuvenated?
A lot of that has to do with the owners and the business climate. Right now, there’s a market for this kind of real estate and equipment. Still, it’s not like selling a used car; you can’t just say, “What’s it going to take to get you into this paper machine today?” The stars need to align to be able to do a redevelopment like this. For instance, Godfrey hadn’t committed to a site yet. They were close—but we were able to keep the focus on Jay.
A seller that’s not broke is a big plus; sometimes sellers go broke and need to simply walk away. However, in this case, Pixelle handled itself as a responsible member of several communities—the local area, the state of Maine, and the industry. They were conscious of doing a transaction that was in keeping with their culture and their desire to find the right transaction partners with a reputation for redevelopment. Pixelle was very aware of the legacy of IP and Verso in caring for the community and wanted to leave the mill with an optimistic future.
Let’s say there’s a pulp and paper manufacturer planning a new machine project. What are the factors that would help it resell the mill’s used assets?
They may want to look outside the sector they’re in. For instance, many of the machines being sold into the linerboard space used to make printing and writing papers. We consider whether the machine has had updates; often machines evolve over time, creating value.
There’s a customer out there somewhere that wants a machine with the right specs—and there are brokers trying to steer that client toward what they’re looking for. It’s got to fit into what the customer expects money-wise; what buyers are willing to pay; and the terms of the sale regarding extraction. For instance, we once sold a machine that was operating next to a running pulp dryer that made fluff pulp; in that case, there were concerns with dust control. There are also timeline schedules, safety considerations, and insurance requirements.
I imagine with a deal like that there are a million issues that need to be addressed.
True. But there are vendors out there—brokers, construction, and engineering companies—that know the process. It’s uplifting when you get an invite to the inauguration of the relocated paper machine a year later. We recently sold two machines from Roaring Springs, PA, to a mill in Colombia. They’re being re-erected right now.
Buying a used machine can help a mill save money and compete in their market with this new asset. They have a plan for the product, and the sooner they get that machine turned on, the better.
Can-Am started back in 1988; for 36 years now, we’ve been a supplier to the industry. We have a former paper mill building as a warehouse for purchased inventory like pressure screens, refiners, vacuum pumps, pulp mill equipment, and spare parts. We also broker equipment for mill owners, redevelopers, and demolition companies. We keep our ear to the ground pretty well and spend a fair amount of time on the road at mills all over North America.
What are the next steps for the Jay mill site project? What might readers learn from Pixelle’s experience?
In September, New Mill Capital is going to hold an auction for all the parts of the plant that won’t be re-used: the spare parts from the pulp mill, accessories, bearings, and parts from the storeroom. That leaves three paper machines. The PM5 machine will likely get “parted” out; but we’re hoping to sell PM3 and PM4 as complete paper machines.
PM3 is a 290-in trim Fourdrinier machine that was making 650 tons of linerboard a day until the day of the incident. And PM4 was making about 500-600 tons a day of release liner; it could make probably 700-750 tpd of linerboard on a 278-in trim machine.
The real message here is how good news can come from a closed mill. The mill site is revitalized, the wood basket is going to be well-used, and the people—landowners, loggers, truckers, mill workers—have good manufacturing back in Jay. The buyer group and the new owners have revenue from the sale of equipment, plus they’ve got room in this redeveloped plant and a piece of real estate they can develop for further use.
I’ve spent a long time around pulp and paper mills that close. Every closed mill has a similar story about why they close. When people ask me, I always say, “It cost them more to make the paper than they could sell it for.” That’s why a mill closes.
A lot of mill closures are sad stories; many times it’s not a great piece of real estate, so nothing happens. But in some cases, motivated people can make good things happen. In this case, instead of the mill slowly dying, it’s a rejuvenation. It’s a story that had some tough chapters but is looking positive for the area right now.
Down Mexico Way for PM2
In 2022, Can-Am sold Pixelle’s PM2, a 240-in. machine that had been idled for several years, to Grupak Paper’s Hidalgo mill in the municipality of Emiliano Zapata, Mexico. Grupak produces paper and linerboard for packaging. Can-Am’s Dan Nigrosh describes the project.
Pixelle had invited me to do an appraisal and evaluation of all the assets that were idled as a result of the digester incident. During my first walk around, I came to PM2 and said, “I can sell this machine—I have a buyer looking for a 240-in. machine just like this one.” It took about a year to put the deal together. We facilitated a relationship with Pixelle through which they sold the machine to our customer and paid us a commission.
We also helped with the contract language of how to remove the machine, though we didn’t get directly involved with the removal or the trucking. That involved about 5,000 tons of equipment that was methodically matchmarked, cataloged, removed, and shipped on about 300 trucks. Many contractors, the customer, and Pixelle all worked very hard to get the job done.
The removal contractor was PIC (Precision Industrial Contractors). PIC did a cutting-edge 3D model of the machine, but it still needed to be taken apart bolt by bolt. The key to taking apart a paper machine is having a team that’s able to catalog each part on every truck. Each part is numbered, and you have a numbered drawing, and the team on the other end puts it together like a puzzle. The trucks head to the border, then they swap drivers while the trailers continue on.
The Grupak engineering team supervised the removal of PM2; that same team is re-installing the machine at its Hidalgo mill. In 2010, Grupak had purchased its PM1 from a mill in Michigan through Can-Am; That project went so well they are installing this second paper machine.
There’s a lot of work with risk management, for both parties. It’s all about putting together a team with a rigor that will satisfy the mill owner, plus a customer willing to take the risk to buy equipment with no warranty and no performance bond. Buyers do miss out on some things vs. a new machine—it takes time to take a machine out safely and there are always gray areas—but they might be saving US$50 million with a used machine.
